A very positive quarterly-earnings report surprised investors and beat Wall Street expectations for Ford, which also managed to see success in the European market for the first time. The American auto maker brought in $2.6 billion in pre-tax profits to secure its 20th-straight profitable quarter, and also marked an increase of $44 million over the same period last year. According to CNBC, analysts expected profits of $2.04 billion to be in the report, which were handily beaten by today’s release.
There was a lot of good news for Ford in the release, and only a scant amount of negatives to draw upon. Mainly, excitement centered around sales picking up steam on the international front, with profits being posted in every market with the exception of one.
“I think the noteworthy thing is, with the exception of South America, we had improved results across all the other automotive business units, and we had a couple that were real stand-outs in record quarter profits in North America and in Asia-Pacific,” said Robert Shanks, Ford’s chief financial officer on a call with Wall St. Cheat Sheet.
“Of course, I can’t pass by the fact that even though it was a small number, we had a profit in Europe,” he added.
The profit in Europe is a big deal. In fact, it’s the first time Ford has seen positive sales numbers from across the Atlantic since 2011. The margin was slim, a mere $14 million, but it still gets the company back in the black on European soil. Last year, losses for that division mounted up to $348 million.
When it comes to South America, where Ford and seemingly every other car company has had problems turning a profit, Shanks says his company has a few things in the pipeline that he hopes will help turn things around.
“We have a good plan, and, of course, it always starts with product. Our team is launching an all-new product called the Ka, which will compete in a very large segment, like 60 percent of the market there,” Shanks said.
The Ka is a smaller vehicle, built for city driving and life in crowded urban areas. While it may be to small for most American consumers’ taste, it appears to be ideal for international markets.
While the Ka is set to take foreign markets by storm, things are still moving along swimmingly for domestic sales. Fueled by interest in the company’s more fuel-efficient take on things of late, Ford’s profits in North America actually hit record levels. Many factors played into this, among them lower costs. As the year goes on, however, that may change as new vehicles hit dealers’ lots.
What’s really giving Ford a leg up on competitors — especially on the domestic front — is the company’s focus on economic vehicles. The company’s signature EcoBoost powertrain options, which now are included in around half of the company’s sales, has been extremely well-received. As fuel prices have shot up over the past several years, and more and more Americans become worried about their impact on the environment, EcoBoost engines have become a popular choice.
Another area where Ford is taking advantage of customers’ thirst for fuel savings is by using new aluminum frames in their pickup trucks, notably the F-150, which is the company’s long-time best seller. By using aluminum, Ford has been able to make its trucks much lighter than before, improving fuel economy. When paired with EcoBoost technology, customers are seeing a big difference.
“What is unusual about the F-150 is that no one in the industry has done an entire vehicle at that volume with aluminum. That’s what’s really innovative about the F-150. We’re taking this material, and the benefits of it — it’s lightweight — into high-volume production,” Shanks said. “It’s a real game-changer.”
There’s also room to speculate that Ford’s success this quarter may come at the expense of some other automakers, notably General Motors , who have had a year filled with recalls and public relations disasters. While others have been focused on retaining or rebuilding its image, Ford has been able to keep its eye on the ball and continue innovating.
Finally, when it came to the recent news about luxury electric car builder Tesla releasing its patents, Shanks says that Ford will definitely look into whether or not they could use any of the technology. “I think the team is looking at that. If there is something there that is of interest to us, I’m sure we would take advantage it,” he said.
While we shouldn’t hold our breath waiting for a new Ford model built off of Tesla’s technology, the steps the company is taking toward more sustainable, fuel-efficient vehicles is paying off for it, as evidenced by the latest quarterly report.
If the company can keep moving vehicles, and also build off its success in Europe and Asia, Ford will become an increasingly attractive option for investors.